If you check out my IRMI.com bio or LinkedIn bio, you'll see I am "experienced." I got my start in the late 70s. My first big promotion was from a desk underwriter to the home office of the same insurer, elevating to the position of marketing analyst and reporting to the vice president of Marketing.
The timing of the position was perfect for me, as I had spent the last year learning coverages, rating, customer service, and workflow operations. It was time to learn about the big picture.
Among other things, my job entailed competitive analysis. I inherited very large pieces of paper called an "analysis pad."
So the job was to, with pencil and calculator in hand, list a set of fictitious risks, one in each row, and then list the competitors along the top of each column. We did a page for each territory. I literally rated each of the risks for each of the competitors. This required obtaining their manuals from an agent, learning their rate order calculation, and doing the math for each row. Of course, since our major state was California, we didn't attempt to complete a page for every territory, but we did many. We also targeted certain competitors.
The company I worked for wrote nonstandard auto insurance, which is extremely price driven, so this was an important job. The underwriting vice president was in charge of pricing, but the marketing vice president lived and died by convincing agents to sell new business policies. He had to be armed for those discussions as well as have evidence for his boss and peers about the competitive position of our rates.
As you can imagine, the information contained in the small stacks of oversized paper is amazing! If you had good intuition and could follow a thread of thinking through several flips of the page, note-taking, and patience, you could make loads of observations with this data.
The troubling part is it took forever to sift the nuggets of info from this laborious project. However, we had no choice if this was our desire. We knew our profitability was dependent on new business since this line doesn't retain very well. Yet our rates had to be adequate, too, making this a multidimensional effort.
We needed to be competitive on all types of risks. Lowest? Not always, but at least in the "ballpark" so our agents would consider placing the risks with us. We leveraged our salespeople, our good service, and our financial stature to sell the agents on why they should, all things being equal, send the applications our way.
Looking back, I can see the value of what we had accomplished, but I can also see many parts of what this data was telling us because we didn't have a way to do the math and tabulate results. The heavy-lifting methodology we were stuck with left many of the following shortcomings.
Analytics have been around ever since the abacus. Our tools have gained capability and efficiency as computing power and data have been more accessible. All the buzz in the last 10 years has been about predictive analytics. You cannot pick up an industry trade magazine or read a blog without seeing its mention.
Companies are inundated with calls from salespeople, webinars, and conference exhibits on the topic. Actuaries or other quantitatively trained "data scientists" can write their own ticket if they are good at wielding software to develop models that help them make decisions based on past history. Our business has gotten more complicated with the need to have multiple perspectives when one look cannot do all the heavy lifting.
Consider the three members of the analytics family.
Analytics, in general, is a more comprehensive mantra for the true data-driven organization. Each one of these tools has its own sweet spot of value to the savvy user. What we were doing in these early days, before regression was chic (or even doable with paper and calculator), would be called descriptive analysis. We felt we were data-driven, and we were, but our capabilities were limited.
Today's tools provide for complete data visualization of a company's competitive status. Competitor companies' pricing is available to be imported into software customized for competitive analysis. Agent files can be imported. Quote/bind history can be imported. Many states have in-force policy information that can be uploaded.
There is no need to rely on hand calculations, guesswork, and anecdotal evidence anymore. With the right data, analytical tools, and a few clicks of the mouse, you should be able to answer the following questions that will drive your growth.
Some of this information was available from our stacks of analysis pads. But it would have taken endless hours of iteration to generate findings to such detail. And these findings based on our selection of sample risks were much less applicable than if they had been based on a representative portfolio of risks, considering the business our company had quoted and either sold or not sold.
Beyond knowing the answers, today's data and tools provide the opportunity to collaborate with actuaries, product managers, underwriters, and marketers. Profitability and growth measures can be balanced. Since everyone has access to the same information, better decisions can be made, and consensus can allow for shared goals, team execution, and winning results.
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